I want to ask if a person has a house as his sole property. He is in need of a money the price of house is five lac (9i.e. five hundred thousand.)) he gave it to a person at 2 lac for three years other person uses it and afterÂ three years gets his money back vacate the house like Hindus do. What Islam says about it when person has no other alternative?
Before I answer your specific question, I would first like to introduce you to some of the basic directives of the Qur’an regarding pledging another person’s asset(s) as a security for a loan granted to him.
Under normal circumstances, Islam does not allow a Muslim lender to keep, as a pledge, anything as security for a loan granted by him. Islam wants to restrict all security for a loan to writing down the loan-document. The allowance for keeping a physical or material security for a loan is restricted to the times when such a loan-agreement is entered into during a journey, where the two persons making the deal may not have access to reliable witnesses of their choice. However, even under such circumstances, the pledged property or asset has been termed as a trust (Urdu/Arabic: amanat), which should not be brought under personal or commercial use, but rather should be kept in safe custody -for return to the borrower – till the time, when reliable witnesses are available and a loan-document can be signed (Al-Baqarah 2: 283). This is primarily a Qur’anic directive for the lender.
Nevertheless, under the prevalent social conditions, a person may not be left with any options, but to pledge his property to secure a loan. If that is truly the case and if the loan is being secured for a justifiable cause (which only the borrower can determine), the borrower may finalize such a deal in which he has to pledge any of his assets for the purpose of securing a loan. It should, however, be kept in mind that the lender in such a deal would actually be committing a sin by not complying with the clear directive of the Qur’an (of not holding anything as security for a loan, where a loan-document can easily be signed and witnessed by reliable persons).
Keeping the above explanation in perspective, let us now turn to your specific question. The arrangement that I have understood from your brief explanation seems to be a step ahead of mere pledging of an asset. What I understand from your introduction to the arrangement (I reproduce to avoid any misperception) is that the borrower gives a lien as well as the possession of his asset (in this case a house), with the permission to use the house (for personal or business use) till such time as the loan is repaid (without paying any amount as the rent for such use).
If my understanding of your stipulated arrangement is accurate, then I really do not see the arrangement to be justified or in keeping with the spirit of the Islamic directives. The fact that the lender will be using the property without paying any rent for it or without making any adjustments in the loaned amount on account of rent for the use of the asset for the stipulated time and yet be receiving the full amount of the loan advanced, makes the arrangement quite similar to a simple Riba-based loan arrangement. The only difference between the stipulated arrangement and one that is a simple Riba-based loan arrangement is that in place of a predetermined increase in the amount of the loan, the lender is charging Riba in the shape of a service rendered by the borrower. In other words, the stipulated arrangement is one of Riba charged in kind, rather than in cash. I would, therefore, not consider it appropriate for the lender (and as a result for the borrower) to enter into such a Riba-based loan agreement.
August 27, 2000